Agency concedes new prison health care contract will cost state $34 million more
The abrupt cancellation of a prison healthcare contract for 82,000 Florida inmates will cost taxpayers $34 million more next year but may result in better oversight and higher quality care, a top state prison official told a Senate subcommittee Wednesday.
Department of Corrections Chief of Staff Stacy Arias told the Senate Appropriations Subcommittee on Civil and Criminal Justice that the decision by Corizon Health to cancel its $1.2 billion contract to provide medical care to state prison inmates three years early forced the agency to sign a new compact that will cost the state more money.
Arias was asked to explain the agency’s decision to replace Corizon with a two-year $268 million contract with Centurion Florida, a healthcare company with deep political connections. The department has drawn a lawsuit from Wexford Health, another politically-connected company, which accuses FDC of violating the state procurement process when it approved the bid.
Under intense questioning by the committee, Arias said that while the Centurion contract will cost more it will also provide the agency with more oversight and ability to track costs, which Corizon’s contract did not allow, it will give the agency the ability to perform more audits and assess damages “if and when appropriate,’’ she said.
Corizon had complained that it had been losing $1 million a month on its contract to provide mental health, dental and health care for the majority of the state’s 100,000 inmates, and Arias said the governor had agreed to ask lawmakers for another $18 million next year.
Instead, Corizon gave the state notice it was walking away from the contract, forcing the agency to find another provider for about 150 prisons before a new contractor was scheduled to be selected in 2017.
Photo: Department of Corrections Chief of Staff Stacy Arias, courtesy of The Florida Channel
Arias said that the emergency situation did not require the state to seek competitive bids and, rather than a formal bid-seeking process, it asked other healthcare companies to offer proposals to fill the gap until the agency negotiates a new bid with new companies in 2018.
Three companies submitted proposals: Wexford, the company that is paid $48 million a year to serve 18,000 inmates in the South Florida region, as well as Centurion, and Armor.
The department awarded the contract to Centurion, a partnership between MHM Services, a provider of mental health care services, and Centene, the company that holds a lucrative Medicaid managed-care contract with the state. Centene contributed $298,000 to legislative campaigns and political committees in 2015, and its chief lobbyist is former House Speaker Dean Cannon.
Department of Corrections Secretary Julie Jones told the committee that the experience has prompted the agency to considering the cost of returning basic of the medical care to department staff while relying on outsourced contractors to provide specialty care for cancer, diabetes, dentistry and other services.
Jones argued that by outsourcing the medical staff, the warden loses authority over the care it provides.
“They don’t have the ability to oversee services, and we get inmate complaints and grievances and we have to go in through the company and then back around,” she said. “We are looking at all those options to get the best bang for the buck and the best ability for our officers to be safe — because when inmates are not healthy, they are not safe.”
A report last fall by the Corrections Medical Authority that oversees the state’s prison system detailed numerous issues problems with Corizon’s care in Florida’s prisons.
For example, at Florida Women’s Reception Center in Ocala, inspectors found a woman with diabetes who went almost three months without insulin. Another inmate with a golf ball-sized lump behind her ear was referred for an MRI and a surgical consultation but never received them. An inmate with a brain aneurysm waited two months before seeing a specialist. And inmates with mental illness, at risk of self-harm, were routinely left in isolation for days.
An investigation by the Miami Herald also found that inmates at the Lowell Correctional Institution, the largest women’s prison in the nation, suffered serious misdiagnoses, delays in treatment and medical neglect under Corizon’s care.
Arias said that while Corizon quit its contract “because of money,” the agency had other concerns, including the fact that it was leaving hundreds of critical healthcare positions vacant.
Wexford sued last week, arguing that state law required the agency’s award of a “no bid” contract violated the state’s competitive procurement process. It argued that the contract gives Centurion the bulk of the money in the state’s 2015-16 budget allocated for inmate healthcare and that will “leave less than $20 million to pay Wexford for its services annually.”
Centurion responded in a statement that it was not a “no-bid” contract in the true sense but a “robust competitive selection process among multiple potential providers” because the companies “engaged in follow-up conversations and requests for clarifying information from FDC and then submitted refinements to their proposals.”
Wexler’s suit argues that the fact that the company is paid on a “cost plus” basis means “the more Centurion expends in performing its services to provide prison healthcare, the more the Department of Corrections must pay for it.”
Centurion disputes the claim that the deal will allow it to make a profit of $31 million because that amount must cover corporate costs, such as information technology, infrastructure and human resources. The company says that “the contribution from this contract to Centurion’s corporate overhead is a much lower single digit” and the potential cost of penalties is higher than the contract the state had with Corizon.
Wexford also argues that there is no incentive “for Centurion to perform in a manner that prevents the available funds from being exhausted before the end of the fiscal year,” noting that the 60-day requirement can allow the company to drain the money and then leave.
“Under this contract, Centurion is in a position where it can bankrupt the Department of Corrections of all the funds it has available to provide prison health services long before the fiscal year in question has expired,” Wexford claims, noting this could lead to federal control of Florida’s prison system.
Although Corizon was given six months’ notice to cancel its contract, Centurion initially was given only 60 days. However, FDC renegotiated the contract Tuesday and extended the time to six months.
“It is also important to note that Centurion has never walked away or canceled a contract, and in fact has come in to take over contracts when other vendors have left,” the company said in its statement.